Federal Budget 2016

ACEC is pleased that the Liberal government’s first budget focused on immediate and long term growth of the economy through investments in infrastructure and innovation. The government’s approach to infrastructure investment is a strong indicator that recommendations presented by ACEC and other stakeholders over the past several years and during the pre-budget consultation period were taken under advisement. Highlights include:

Over $60 billion in new federal infrastructure investments in two phases ($12 billion in the first phase) in addition to the existing Building Canada Fund;

Acceleration of portions of the existing Building Canada Fund;

Previously uncommitted money from the previous Building Canada Fund added to the Gas Tax Fund over the next two years;

An additional $3.4 billion in investments for federal infrastructure assets; and

$2 billion over three years of new money for infrastructure investment in post-secondary institutions.

Timing of the federal government’s plan
Phase 1 of the government’s infrastructure plan appears to be designed to address immediate infrastructure needs and to stimulate the economy. It also accelerates some elements of the Building Canada Fund. Providing funding in phases is not necessarily problematic, though it does suggest that much of the money is back-end loaded. ACEC will work with government to ensure they are mindful that next year’s shovel-ready and worthy projects and those of the 10-year commitment require engineering, architecture and design work on the table many months before any construction work is underway.

Phase 2 will focus on infrastructure of long-term strategic importance to the overall Canadian economy. ACEC will stress to government the importance of embarking on Phase 2 of infrastructure spending sooner rather than later and involving the design and construction sector in the program design.

Note that unlike the Building Canada Fund, engineering costs will be eligible expenses for municipalities to claim under the new infrastructure funds for transit and green infrastructure.

With respect to the Building Canada Fund, ACEC has learned that Ontario is the only province to submit its full list of proposed projects, which has contributed to the delay in investments under this fund. It is also worth noting the PPP screen for projects under the Building Canada Fund has been discontinued.

Efficient and science-based environmental assessment process
The federal budget also contains significant measures to encourage and support environmental
sustainability. While encouraged that the government proposes a rigorous environmental assessment process based on science, ACEC will be seeking assurances that processes will be clear and efficient and won’t encourage frivolous or vexatious delays to infrastructure and resource projects that are important to the economy.

Canadian Infrastructure Bank
ACEC has confirmed that the promised Canada Infrastructure Bank which wasn’t mentioned in the 2016 federal budget is still in development and will likely be introduced as part of Phase 2. It appears that the government has not yet established the mandate or the parameters of the bank.

Resources sector and small business
ACEC is disappointed that there was minimal assistance to the resource sector, which has carried Canada’s economy over many decades. This sector has played a vital role in the modernization of our economy in the past and will continue to contribute to Canada’s prosperity if supported. ACEC sees the Canada Infrastructure Bank's mandate including assistance to help the resource sector access capital.

The deferral of tax relief for small businesses is also unfortunate for this important segment of the Canadian economy.

Providing value and fiscal responsibility to Canadians
While the deficit is of concern, ACEC sees debt management as the real long term issue. Investing in projects with the highest potential return on investment will be of essence. To that end, modern and progressive procurement practices like Qualifications-Based Selection (QBS), especially for design professionals, would also contribute to the success of infrastructure investments by ensuring high quality, high value projects with increased service life and significant life-cycle savings.

More infrastructure investment still needed

As welcome as the budget 2016 announcement was, there is still much to do. Since 2006, infrastructure investment in Canada has averaged 3.4% of GDP which is significantly lower than the 6% of GDP seen in the 1950s and 1960s and the 9% of GDP that some of Canada’s major economic competitors, such as China and India, are investing in infrastructure.

ACEC believes that responsible fiscal management and the elimination of the deficit provide governments the opportunity to increasingly improve Canada’s prosperity through further investments in infrastructure.

ACEC recommends that a portion of any surplus be dedicated to infrastructure with a long-term goal that investments by all three levels of government return to historical levels of 6% of GDP. Learn more about supporting data and facts.